I, JOHN P. BLUMBERG, declare that I have personally read all documents referenced in this declaration and would testify as follows.
1. I was admitted to practice in California in December 1976 and have continuously practiced civil litigation. My professional resume is attached hereto and incorporated as though fully set forth. I have been A-V rated by Martindale Hubbell Law Directory since 1993 and have been Certified as a Civil Trial Advocate by the National Board of Trial Advocacy since 1987. I have been a member of the American Board of Trial Advocacy since 1991. I am on the boards of Consumer Attorneys of California, Consumer Attorneys Association of Los Angeles, and the Ball-Hunt Inn of Court. From 1988-1990, I was on the Board of Directors of the Long Beach Bar Association. I served on the California State Bar Committee on Rules and Procedures of Court from 1989 to 1993, the last year as chair. I have served as an arbitrator for attorney-client fee disputes for the Long Beach Bar Association and the Orange County Bar Association. I have over 70 hours of formal mediation training and have served as a mediator in over 200 cases. I am currently on the mediation panel of the Los Angeles County Superior Court and the American Arbitration Association.
2. I have reviewed [defendant-attorney’s] underlying file in the case of [Plaintiff], et al. vs. [Underlying defendant], et al. and the deposition of Harry [Plaintiff] in that case. The documents I have reviewed from this action are: (1) the deposition of Harry [Plaintiff], including the exhibits attached thereto; (2) Plaintiff Harry [plaintiff]’s responses to defendant, [defendant-attorney’s] first set of request for admissions; (3) Plaintiff Harry [plaintiff]’s responses to form interrogatories; (4) Plaintiff Harry [plaintiff]’s responses to defendant, [defendant-attorney’s] first set of special interrogatories; (5) Plaintiff Harry [plaintiff]’s responses [defendant-attorney’s] first set of request for production of documents; and (6) the summons and complaint.
3. I am familiar with and knowledgeable of the standard of care required of attorneys handling litigated matters such as the underlying case of [plaintiff], et al. vs. [Underlying defendant], et al. including settlement negotiations and mediated settlement agreements.
4. Based on my education, training and experience, it is my opinion that defendant, [defendant-attorney] complied with the standard of care in his representation of plaintiff, Harry [plaintiff]. My opinion is based on the documentary and deposition testimony set forth below, beginning with paragraph 5.
DOCUMENTS AND TESTIMONY RELIED ON FOR OPINION
5. In 2001, Harry [plaintiff] and his wife, [DW] invested or loaned $220,000 to [Underlying defendant] which defaulted on its obligation. [[Plaintiff] deposition, 16:2- 17:15.] On January 17, 2002, [Joseph B], signing on behalf of [Underlying defendant], signed a promissory note to Harry [plaintiff] for $250,000, which was a new loan. [Exhibit 1 to [plaintiff] deposition.]
6. On June 17, 2003, a new Promissory Note was entered into between Harry [plaintiff] and [Joseph B]. Unlike the first note in which [Underlying defendant] was the promissor, the promissor in the new note was “[Joseph B] of [Underlying defendant].” The new Promissory Note for $300,000 was a “rollover” of the first note, plus interest. [Page 33:6-11 of [plaintiff] deposition and Exhibit 3 thereto.] Mr. [Joseph B] defaulted on the $300,000 note. [[Plaintiff] deposition, 33:12-24.]
7. In February 2003, [defendant-attorney] was retained by Mr. [plaintiff] and others to prosecute [Underlying defendant] and others, including [Joseph B], for the defaults on the 2001 loans. [[Plaintiff] deposition, 138:16-21.]
8. In December, 2003, Mr. [plaintiff] informed [defendant-attorney] of the $250,000 promissory note with Mr. [Joseph B] and [defendant-attorney] responded that he would attempt to include it in the claim against [Underlying defendant]. [Exhibit 26 to [plaintiff] deposition.]
9. A mediation with retired judge John Kennedy of JAMS was scheduled for May 26, 2004, and on May 23, 2004, Mr. [plaintiff] sent an email to [defendant-attorney] asking “How have you decided to present our base case and include the $250,000 additional investment....?” [Defendant-attorney] replied “I will present our case for total damages - this means all damages including commissions. The extra $250k, is problematic. I am going to include it but get ready for a loud scream from AA.” [Exhibit 6 to [plaintiff] deposition.]
10. Mr. [Plaintiff] had previously discussed his additional January and June 2002 loans with his co-plaintiffs and that he was going to try to resolve that claim at the mediation. [[Plaintiff] deposition, 49:3-8.]
11. [Underlying defendant] was in bankruptcy at the time of the mediation and Mr. [plaintiff] and his co-plaintiffs agreed to look solely to the insurance with respect to any recovery against [Underlying defendant]. [[Plaintiff] deposition, 54:25-55:11.] Mr. [plaintiff] has no information about assets of Mr. [Joseph B] or [Underlying defendant] to satisfy the $250,000 obligation. [[Plaintiff] deposition, 175:2-11.]
12. At the mediation, [defendant-attorney] presented the additional $250,000 loan. [[Plaintiff] deposition, 53:18-21.]
13. The final offer from the defendants was $434,000. Mr. [plaintiff] never informed [defendant-attorney] at the mediation that because the insurance carrier was unwilling to go beyond $434,000 that he was withdrawing his $250,000 January, 2002 investment from the computation. [[Plaintiff] deposition, 66:19-25.] Mr. [plaintiff] also did not tell the other plaintiffs making claims at the mediation that he was withdrawing his $250,000 January, 2002 investment from the computation of damages at the mediation. [[Plaintiff] deposition, 67:7-11.] When he did tell the other plaintiffs making claims that he was withdrawing his $250,000 January 2002 loan to Mr. [Joseph B] from the computation, [defendant-attorney] was not part of the conversation. [[Plaintiff] deposition, 66:25-68:25.]
14. A “Stipulation for Settlement” was signed at the conclusion of the mediation. [Exhibit 8 to [plaintiff] deposition.] Mr. [plaintiff] says that he did not read the agreement and that he was shown only the last page for signature. [[Plaintiff] deposition 56:14-17.] The settlement agreement provided at paragraph 3 that “payment shall fully and forever discharge and release all claims and causes of action, whether now known or now unknown, which Plaintiff(s) have against any and all of the Defendants in this action.” [Exhibit 8 to [plaintiff] deposition.]
15. [Defendant-attorney] sent a “Settlement Agreement and Mutual Release” to Mr. [plaintiff] on July 13, 2003, consisting of 19 pages, which was signed by Mr. [plaintiff]. [Exhibit 12 to [plaintiff] deposition; [plaintiff] deposition, 76:10-18.] Page 6, paragraph 2 contained a complete release of all claims against all parties. Mr. [plaintiff] read Exhibit 12 which identified Mr. [Joseph B] as a party to the agreement. [[plaintiff] deposition, 80:21-81:18.]
16. Mr. [plaintiff] did not know if all the terms of the agreement applied to him, specifically, but he did not ask [defendant-attorney] or anyone else to explain any of the provisions. [[plaintiff] deposition,77:3-78:22.]
17. On August 6, 2004, [defendant-attorney] sent an email to Mr. [plaintiff] with a revised settlement agreement attached. He wrote that he found no changes that he believed were significant from the first version previously emailed to Mr. [plaintiff], but wrote: “However, you should read this one and understand that the agreement that you are agreeing to is this one and not the first document I provided to you.” [Exhibit 16 to [plaintiff] deposition.]
18. The revised settlement agreement consisted of 18 pages and again included Mr. [Joseph B] as a party, but added (at page 5, para. 26) [Underlying defendant] as a party and (at page 6, para. 3) a party released by the agreement.
19. Mr. [plaintiff] read [defendant-attorney’s] August 6, 2004 email advising him to carefully review the revised agreement, but did not follow his advice and did not read it before signing it. [[Plaintiff] deposition, 172:6-23.]
20. Mr. [plaintiff] was self-employed and wrote business plans, feasibility studies, monitored projects and was involved in financial analysis. [[Plaintiff] deposition, 10:4-12:14.]
21. The basis of the claim of legal malpractice against [defendant-attorney] is that if the settlement agreement released claims for the loans to [Underlying defendant] and [Joseph B], [defendant-attorney] failed to reasonably and properly advise plaintiff of the waiver of his rights or otherwise protect his ability to later seek reimbursement for such promissory note. [[Plaintiff]’s response to [defendant-attorney] Special Interrogatory No. 1.]
REASONS FOR OPINION
22. Although the January 2002 promissory note had been between Mr. [plaintiff] and [Underlying defendant], the June 2002 promissory note was between Mr. [plaintiff] and Mr. [Joseph B] “of the [Underlying defendant]”, not “and the [Underlying defendant].” [Defendant-attorney] was instructed by Mr. [plaintiff] to include his claims against Mr. [Joseph B] (arising out of the 2002 default) with the claims for the 2001 default. At the mediation, [defendant-attorney] followed Mr. [plaintiff]’ instructions to include his 2002 claim with the 2001 claims and Mr. [plaintiff] never told [defendant-attorney] that he wanted to withdraw his 2002 claim from those being negotiated. Therefore, it was reasonable and within the standard of care for [defendant-attorney] to approve the inclusion of a release of all claims against Mr. [Joseph B] in the settlement agreement. Mr. [plaintiff] was not uneducated or unsophisticated. He had a masters degree and was self-employed in a business involving the writing of business plans and financial analyses. It was not necessary for [defendant-attorney] to explain to Mr. [plaintiff] what claims were being included in the agreement because [defendant-attorney] had been instructed by him to include the 2002 claim.
23. When the first “formal” settlement agreement was sent to Mr. [plaintiff], it clearly identified Mr. [Joseph B] as one of the parties released from “any and all Claims of any kind or nature whatsoever, past, present or future... which any party ever had, now has or may have, resulting from, arising out of , or in any way, directly or indirectly connected with (a) any act, omission , event, incident, matter, dispute, injury, or thing which may have occurred or arisen in connection with or in relation to Plaintiffs’ provisions of money to ... [Joseph B]... .” This was not a vague provision, but clearly applied to all claims against Mr. [Joseph B]. If Mr. [plaintiff] had not understood this or any other provision of the agreement, and if he had asked [defendant-attorney] to explain it, then – and only then – would [defendant-attorney] have the obligation to explain it.
24. When the revised agreement was sent to Mr. [plaintiff], it repeated the language of the previous agreement and now included “[Underlying defendant]”. The inclusion of [Underlying defendant] was not significant because the January 2002 promissory note had been superseded by the June 2002 promissory note which obligated Mr. [Joseph B], not [Underlying defendant]. Nevertheless, [defendant-attorney] complied with the standard of care by advising Mr. [plaintiff] that “you should read this one and understand that the agreement that you are agreeing to is this one and not the first document I provided to you.” If Mr. [plaintiff] had not understood this or any other provision of the agreement, and if he had asked [defendant-attorney] to explain it, then [defendant-attorney] would be obligated to explain it.
25. Even if Mr. [plaintiff], in July 2004, had informed [defendant-attorney] that it was not his intent at the mediation to release Mr. [Joseph B] from the 2002 claim, it is unlikely that he could have rescinded the “Stipulation for Settlement” since he had authorized [defendant-attorney] to include the 2002 claim in the negotiations that led to the settlement amount agreed upon. But even if it could be rescinded, [defendant-attorney] had never been told that the 2002 claim against [Underlying defendant] and Mr. [Joseph B] was withdrawn from the negotiations and, therefore, [defendant-attorney] was justified and completely within the standard of care in submitting the conforming settlement agreements to Mr. [plaintiff].
I declare under penalty of perjury that the foregoing is true and correct. Signed on February 19, 2007, at Long Beach, California.